DOE adopted the guidelines in part to protect the habitat of fish listed as threatened under the federal Endangered Species Act. As a result, some say the case may test the ability of federal law to indirectly regulate state and local land-use decisions. The changes were ordered by the state Legislature in 1995 as part of the procedure for state's Shoreline Management Act, passed in 1971 by voters intent on protecting the state's waterways from harm by way of development.

In its appeal, the Association of Washington Business and other petitioners are claiming the state overstepped its authority. "Petitioners submit that DOE does not have the authority to convert decisions by local governments or the Shoreline Hearings Board and the Growth Management Hearings Boards into federally funded or federally authorized action," according to the petition filed Friday.

The state attorney general's office, which will defend the DOE, argues that the agency was implementing the state Shoreline Management Act, not the federal Endangered Species Act, and is therefore safe in its actions.

Gov. Gary Locke reportedly plans to ask the Legislature to change the Shoreline Management Act to allow local communities up to five years to update their regulations, and is also seeking $6 million from the Legislature to help cover implementation costs.